In advance of the upcoming Medicare Annual Enrollment Period (AEP) from October 15 through December 7, the period during which beneficiaries can make changes to Medicare Advantage (MA) and Part D coverage for the following year, the Centers for Medicare & Medicaid Services (CMS) released a summary of MA and Part D plan changes for 2025 in a press release titled “Medicare Advantage and Medicare Prescription Drug Programs to Remain Stable as CMS Implements Improvements to the Programs in 2025” (September 27, 2024). The press release stated that “average premiums, benefits, and plan choices for Medicare Advantage (MA) and the Medicare Part D prescription drug program will remain stable in 2025.” Noting that average premiums for MA plans and Part D plans are decreasing, CMS states that rebate dollars paid to MA plans, “which can be used for supplemental benefits, will remain stable, with a slight increase, from 2024 to 2025” and enrollment in MA is projected to increase in 2025.
While overall stability in the MA and Part D market is projected, there will be some reduction of benefits and plans leaving certain areas. As noted by ABC News in an article titled “Medicare Advantage shopping season arrives with a dose of confusion and some political implications” by Tom Murphy and Amanda Seitz (Sept. 28, 2024)
More than a million people will probably have to find new coverage as major insurers cut costs and pull back from markets for Medicare Advantage plans, the privately run version of the federal government’s coverage program mostly for people ages 65 and older.
Similarly, Axios notes in an article titled “Medicare Advantage retreat could squeeze seniors” by Maya Goldman (Oct. 3, 2024) that according to an analysis by Leerink Partners, MA “[i]nsurers on average decreased their offerings of Medicare Advantage plans that include prescription drug coverage by 6.6% for 2025.” Noting that “Medicare advisers to Congress and other experts say the insurers are overpaid and that the program costs taxpayers billions more than it should”, the article puts these changes in plan offerings in context:
The big picture: Medicare Advantage has been a lucrative and fast-growing business over the past couple of years, but the tide may be shifting after the Biden administration made a series of changes to reimbursements and other policies that didn’t land well with insurers.
Insurance Industry Response to Plan and Benefit Changes: Blame Anyone But Us
The same day that CMS released its overview of the 2025 market, insurance industry group Better Medicare Alliance issued a press release titled “Better Medicare Alliance Responds to CMS 2025 Medicare Advantage Premiums and Enrollment Projections” (Sept. 27, 2024). The release states:
“More seniors continue to choose Medicare Advantage because it delivers better health care at a lower cost than Fee-For-Service Medicare,” said [BMA’s CEO] “However, millions of seniors could see disruptions to their Medicare Advantage coverage next year, including plan closures, higher out-of-pocket costs, and fewer supplemental benefits that close coverage gaps. This is a direct result of recent Medicare Advantage policy changes. We urge policymakers to ensure stability for seniors moving forward with policies that protect Medicare Advantage.”
After this warning, the press release goes on to state that a “record” number of individuals are projected to choose MA in 2025, and that “premiums will remain stable” and beneficiaries “in most areas will continue to have access to a range of plans.”
As discussed below, this statement employs common – and misleading – industry talking points, with the goal of trying to convince policymakers to both pay MA plans even more and to leave them alone. Neither of these options would benefit the Medicare program and its beneficiaries.
MA – Better Care at a Lower Cost? Answer: No
As we discussed in a CMA Alert (Aug. 29, 2024), the insurance industry recently launched a “seven-figure lobbying blitz” to convince policymakers that MA provides better care at a lower cost. As we documented in the Alert and a prior Special Report (July 18, 2024), in short, it does neither.
Better Care?
The results are decidedly mixed. For example, the Commonwealth Fund (2024) notes that most evidence shows that quality of care delivered through MA and traditional Medicare is “equivalent overall.” Similarly, KFF noted in 2022 that a review of relevant literature “found few differences between [MA] and traditional Medicare that are supported by strong evidence or have been replicated across multiple studies.”
While MA tends to outperform traditional Medicare in things like preventive care and hospital readmission rates, there are a number of studies showing that MA generally performs worse in several troubling respects. For example: a JAMA Viewpoint article (June 2024), citing a study in the Journal of Clinical Oncology (2023), states that “MA enrollees requiring complex cancer surgeries are less likely to be treated at specialized centers, experience longer delays and higher mortality than beneficiaries in [traditional] Medicare”; a study in JAMA Health Forum (March 2024) found that not only do MA plans provide less home health services than traditional Medicare, but also that MA enrollees have worse functional outcomes; and a Government Accountability Office (GAO) study (2021) found that “Medicare Advantage beneficiaries in the last year of life disproportionately disenrolled to enroll in fee-for-service, indicating possible issues with their care.”
Lower Cost?
- Definitely not for the Medicare program. The Medicare Payment Advisory Commission (MedPAC) concluded in their March 2024 report that “upcoding and favorable selection paid MA plans $83 billion (22 percent) more than what Medicare would have paid if MA enrollees were in [traditional Medicare]” in 2024 alone. As noted in a recent CMA Alert (Aug.29, 2024), a recent JAMA Viewpoint article (Aug. 2024) states that “these additional payments result in MA plans costing the federal government approximately $2500 more per beneficiary in 2024 than what it would have cost to cover similar beneficiaries in TM [traditional Medicare].” Some estimates of MA overpayments are higher; for example, Physicians for a National Health Program (PNHP) puts the cost at up to $140 billion annually; the Committee for a Responsible Federal Budget (CRFB) posted research suggesting that MA plans might be overpaid by between $180 billion and $1.6 trillion over the next decade.
- Not for beneficiaries in traditional Medicare. According to MedPAC, these higher payments to MA plans result in about $13 billion in additional Part B premiums paid by all Medicare beneficiaries in 2024, including those not enrolled in MA plans.
- And not necessarily for MA enrollees. According to the Commonwealth Fund (2023) “there doesn’t appear to be much difference between these plans and traditional Medicare with respect to affordability.” The JAMA Viewpoint article cited above notes that “some evidence indicates that MA enrollees may have more problems affording health care” stating that a 2024 survey of Medicare beneficiaries “found a significantly larger proportion of enrollees in MA than in [traditional Medicare] said they could not afford health care they needed because of co-payments or deductibles (12% vs 7%) […] problems paying medical bills and paying off medical debt (21% vs 14%), which was particularly true for older adults with middle incomes (27% vs 16%).” As noted in our Special Report (July 2024), a June 2024 Annals of Internal Medicine study examined whether the financial burden of care decreased for people switching from traditional Medicare to Medicare Advantage relative to those who remain in traditional Medicare and found that out-of-pocket costs increased for those switching to MA and, rather alarmingly, “we found that switching to MA was associated with increased financial burden among vulnerable populations, especially those with low incomes [emphasis added].”
Recent Medicare Advantage Policy Changes: More Accountability for MA
The insurance industry statement referenced above claims that the “disruptions” in the MA industry are a “direct result of recent Medicare Advantage policy changes.” Recent policy changes made by the Centers for Medicare & Medicaid Services (CMS) have largely led to increased protections for MA enrollees and more accountability for MA plans. Below is a sample of some of these recent policy changes applicable to MA plans.
More Accurate Payment
- 2025 Payment Rate – Earlier this year, the Medicare program finalized MA payment rates for 2025, which included an overall pay increase of 3.7% (or $16 billion) – about which, as we catalogued in a CMA Alert (April 4, 2024), the insurance industry was unhappy because it was a less-than-expected raise from the prior year. This follows CMS action to phase-in risk adjustment model updates aimed at more accurately paying plans.
- New Rule re: Audits of Overpayment to MA Plans – CMS has a process for auditing plan payments in order to recoup inappropriately paid dollars, called risk adjustment data validation (RADV) audits. This process, however, is years behind and a long-delayed final rule revising the process was finally issued in January 2023. As we noted in a February 2023 statement about the rule, while it demonstrates CMS’ acknowledgment of the need to address inappropriate MA overpayments, and it retains methodology strongly opposed by the insurance industry, CMS is leaving behind significant amounts of money that it has already determined were inappropriately paid over many years.
- Adjustments to the Star Ratings and Bonus Systems – despite KFF projections that MA plans will receive at least $11.8 billion in bonus payments in 2024, for several years, MedPAC has declared that quality bonus program, which increases payment to MA plans based on a 5-star rating system, doesn’t adequately measure plan quality; further, as noted in an Urban Institute report (June 2023), “Despite the 10-year commitment to paying MA plans substantial bonuses to support successful quality improvement, the preponderance of research does not demonstrate that beneficiaries, on average, receive higher quality care in MA than they would in the traditional Medicare program.”
Stronger Consumer Protections
- Improvements to Prior Authorization Process – in a final rule for 2024, CMS made a number of significant improvements to the rules surrounding MA plans’ use of prior authorization to restrict access to services (see our Special Report (May 2023) describing these changes, as well as the marketing changes referenced below).
- Addressing Marketing Misconduct – in a final rule for 2024, CMS make a number of improvements aimed at making plan advertising more accurate and reining in agent/broker abuses; CMS made additional changes for 2025, including adding guardrails to agent/broker compensation (currently on hold due to litigation), and other consumer-friendly rules, such as new standards surrounding supplemental benefits.
- Inflation Reduction Act (IRA) Prescription Drug Changes – MA plans that offer Part D prescription drug coverage must follow the same rules as stand-alone Part D plans, including instituting a $2,000 out-of-pocket cap in 2025.
Conclusion: We Can’t Afford MA “Stability”
After complaining that “policy changes” are responsible for MA plan “disruptions” in 2025, the insurance industry statement above urges policymakers to “ensure stability for seniors moving forward with policies that protect Medicare Advantage.”
In recent years, CMS has taken important steps to start reining in MA overpayments and improving consumer protections. But despite these steps, MA plans are still significantly overpaid and underregulated, and the new consumer protections don’t go nearly far enough to combat ongoing challenges for beneficiaries, including prior authorization abuses and marketing misconduct.
Each year, plan sponsors make business decisions about their plan benefits, and whether to continue offering plans in a given area. If plan sponsors cannot manage without their overpayments and with more oversight, they can choose not to do business with Medicare.
Instead of “protect[ing] Medicare Advantage” as the industry pleads, we urge policymakers to instead focus on protecting Medicare beneficiaries – including MA enrollees – and the broader Medicare program.
October 3, 2025 – D. Lipschutz